I think the Spurs would also be wise to look at it from a Toros aspect, as well.
I completely agree with your assessment of the roster moving forward and the cash considerations, but I think the actual bearing of fruit from their farm team is something that should also sway Holt and the Spurs; at some point, the potential prospects have to see a light at the end of the tunnel if you're expecting the Toros to be a true feeder team. Plus, it's good business for the Austin fan base to believe they're watching the Spurs of tomorrow and not a bunch of scrubs that will never make the roster.
Bottom line, Malik makes too much basketball sense for them to release him for basketball cents; even one-hundred-plus million of them.. Malik, in a vacuum, has done everything expected to make this team and he actually fills a need for a team still in need of a defensive stopper; no matter how high they are on Hill, he's just too small for the better 2' and 3's of the league.